Establishment of an early warning system for diminishing sources of materials and critical components and parts supply (DoD Directive 4005.16, copy enclosed).

Encouragement of wider recognition of the potential of appropriations authorization under Title III of the Defense Production Act of 1950, as amended, to remedy materials shortages and deficiencies in production capacity.

Encouragement of modern technology advances through the DoD

Manufacturing Technology Program to make U.S. industry more

competitive with foreign production sources.

96-305 - 77 - 12

Refs.:

(b)

(DMSMS)

(a) DoD Directive 4005.1, "DoD Industrial Prepared-
ness Production Planning," July 28, 1972
DoD Instruction 4400.1, "Priorities and Allocations
Delegation of DO and DX Priorities and Allocations
Authorities, Rescheduling of Deliveries and
Continuance of Related Manuals," November 16, 1971
DoD Instruction 4140.26, "Integrated Materiel
Management of Consumable Items," February 26, 1972
DoD Instruction 4210.4, "Studies on the Availa-
bility of Materials," October 6, 1971

(c)

(a)

I.

II.

III.

PURPOSE

This Directive establishes policies and assigns responsi-
bilities within each DoD Component to assure timely action
is initiated when essential end item production capabilities
are endangered by the loss or impending loss of manufacturing
sources or by material shortages.

APPLICABILITY AND SCOPE

A.

The provisions of this Directive apply to the Office of
the Secretary of Defense, the Military Departments,
and the Defense Agencies (hereinafter referred to col-
lectively as "DoD Components").

B. Its provisions encompass items and materials used and
managed by DoD Components and by contractors supporting
DoD peacetime, surge and mobilization requirements, and
all items for which a critical manufacturing/material
source of supply no longer exists or potentially will
not exist, or we are reduced to a single source, within
the scope of this Directive.

DEFINITIONS

As used in this Directive, the definitions in enclosure 1 apply.

IV.

V.

VI.

POLICY

DoD Components shall assure that timely actions are initiated when
a development program or an end item production or support capa-
bility is endangered by the lack, or impending lack, of manufac-
turing sources for items and material. Implementing procedures
to achieve the objectives listed in section V., below, shall be
developed by each DoD Component. These procedures shall apply
to each item until:

A.

B.

The applicable end items have been replaced, modified, phased
out of the inventory, or

Sufficient item assets or manufacturing/supply capabilities
are available to ensure support through the forecasted end
item life cycle.

OBJECTIVES

A.

B.

C.

Minimize the impact of diminishing sources and material shortages upon Defense Programs by the initiation of prompt and timely actions to assure the availability of critical materials and manufacturing capabilities to support current and planned Defense requirements.

Improve operational readiness by undertaking prompt action to identify and implement the most effective solution consistent with overall mission requirements.

Improve timeliness of response in diminishing source and mate-
rial shortage situations by developing methods which ensure
the integration of DoD's Diminishing Manufacturing Sources and
Material Shortages System and procedures with other Government
agency systems and ensure rapid exchange of information between
DOD Components, Department of Commerce, Energy Research and
Development Administration, State Governments, industry and
other interested Government activities.

D. Improve communications, coordination, problem analysis and solution by establishing a single organizational focal point within each DoD Component responsible for dealing with material shortage and diminishing source problems.

RESPONSIBILITIES

A.

The Assistant Secretary of Defense (Installations and Logistics) (ASD(I&L) shall be responsible for:

1. Overall policy and guidance in matters pertaining to the
management of items and material when a critical source

has discontinued, or is projected to discontine production
or supply.

B.

Dec 3, 76

4005.16

2. Resolving proposed actions which do not have the concurrence of all affected DoD Components.

3. Developing policies and providing review for those resources identified in DoD Component budget submissions that relate to diminishing manufacturing sources and material shortages relative to both U.S. and International Logistics Support requirements.

4. Establishing and maintaining a single organizational focal point to deal with material shortage and diminishing source situations within DoD and between other agency headquarters.

DOD Components on a normal working basis shall coordinate with operational activities within other Government agencies on the identification of critical items and possible solutions, and action criteria for items affected by the loss or potential loss of critical manufacturing source, or supplier of material. Implementation

will be in accordance with the policies, plans, programs and guidance provided by the Assistant Secretary of Defense (Installations and Logistics), and this Directive. This responsibility includes:

1.

Establishing and maintaining a single organizational focal point to monitor all material shortage and diminishing source situations.

2. Developing plans and simplified coordination mechanisms to deal with existing and potential diminishing manufacturing sources and material shortages, including interaction with Department of Commerce, Environmental Protection Agency, Occupational Safety and Health Administration, and other Government activities.

3. Taking rapid remedial action when faced with a material shortage or manufacturer phaseout. Action alternatives include:

8.

b.

Finding new sources. (In exceptional cases foreign sources can be considered, except where Industrial Preparedness Planning (IPP) is involved and foreign source would be the sole source.)

Encouraging industry to continue production.

4.

g. Modifying equipment and/or repair part.

h.

1.

J.

k.

Utilizing Secretarial determination and findings (D&F) to ensure that appropriate procurement actions are taken to preserve the industrial source necessary to meet industrial preparedness requirements. Also joint DOD Component D&Fs will be established where procurement must be allocated to preserve the base.

Invoking Defense Production Act authorities (Special Priorities
Assistant) where applicable.

Initiating life of type buy. Where the items are secondary
items and the alternative is determined as necessary and the
buy will exceed $500,000 in any one fiscal year, prior approval
must be obtained from Office of the Assistant Secretary of
Defense (Installations and Logistics) before funds are com-
mitted.

Ensuring that a cost/availability tradeoff determination is accomplished between support alternatives for existing end item and possible replacement by a new or substitute end item. Initiating actions to reduce reliance on sole source manufacturers and suppliers through the development of additional sources or coordination of substitute items with equipment users.

5. Maintaining close contact with industrial/scientific and engineering organizations and industry through a system of followups to discern future trends.

6. Using engineering, standardization and technical organizations to assure that the most current standard or preferred parts are used in systems design and development.

7. Reviewing the efforts of other Government departments in the area of material shortages and production phaseouts. Use output from their system where possible and ensure that a compatible data interchange method is established. Communicate DoD-related data directly to all concerned DoD Components, and through Office of Assistant Secretary of Defense (Installations and Logistics) to other Government agencies.

8. Developing compatible management techniques through coordination with other DoD Components and ensure that adequate information and controls for material shortage and diminishing source situations.

9. Ensuring that diminishing manufacturing sources and material shortages are recognized in the DSARC proceedings.